Ukraine’s Yanukovych Nominates Sorkin to Head Central Bank

Jan. 9 (Bloomberg) -- Ukrainian President Viktor Yanukovych
picked Ihor Sorkin to head the central bank before this month’s
International Monetary Fund visit over a new bailout.

A draft bill nominating Sorkin, who’s currently acting
governor after Serhiy Arbuzov was promoted to first deputy prime
minister last month, was published today on parliament’s
website. His appointment requires approval by lawmakers.

Yanukovych, whose Party of Regions fell short of securing a
majority in winning October parliamentary elections, said Dec.
24 that closer cooperation between the government and the
central bank is needed. The IMF postponed a December trip to
Ukraine until mid-January to allow a new cabinet to be chosen
after the ballot.

“Sorkin’s nomination is a status-quo move,” Luis Costa,
an emerging-market strategist at Citigroup Inc., said by phone
from London. “It looks like a natural continuation of the
current policy. Sorkin was deputy governor, and worked in
relative harmony with Arbuzov.”

The hryvnia declined to 8.0949 per dollar by 2:34 p.m. in
the capital, Kiev, compared with 8.0650 yesterday, according to
data compiled by Bloomberg.

Donetsk Connection

Sorkin, 45, was born in the eastern city of Donetsk in
Yanukovych’s native region, according to the Audit Chamber. He
was named deputy central bank governor in July 2010, leading the
regulator’s supervisory department.

Ukraine, whose economy shrank 1.3 percent from a year
earlier in the third quarter on slowing global demand for steel,
plans to seal a $12 billion IMF program and wants to receive
$1.5 billion in February, the Kommersant-Ukraine newspaper
reported Dec. 12, citing an unidentified person at the central
bank with knowledge of the matter.

A previous bailout was frozen by the Washington-based
lender because the government refused to trim residential
heating subsidies. That loan expired Dec. 31.

The central bank will defend the hryvnia from attacks that
may negatively influence inflation, according to Valeriy
Lytvytskyi, chief adviser to the regulator.

“The hryvnia rate will be more volatile but we’ll fight
speculative attacks,” he told reporters today in Kiev.

Ukraine’s foreign reserves plunged 23 percent last year to
$24.5 billion, the lowest since February 2010, amid selling
pressure on the currency. Reserves are at a “decent” level,
Lytvytskyi said.